US CPI data met expectations at 3.4% YoY in July, reducing pressure on the Fed to hike rates in September.
The EUR/USD pair traded near 1.1520 in early European trading on Thursday, reflecting subdued movement after US inflation data eased. The US Consumer Price Index rose 3.4% year-over-year in July, matching forecasts and down from 3.5% in June. Core CPI, excluding food and energy, increased 2.5% YoY, also in line with expectations.
Traders have scaled back bets on a September Fed rate hike, with odds now at 40%, according to the CME FedWatch tool. The US Producer Price Index for July is due later Thursday, while August CPI and jobs reports will be key ahead of the Fed’s next meeting. Geopolitical tensions in the Middle East, however, could support the USD as a safe-haven asset.
Analysts noted the Euro’s mixed performance against the USD, with post-FOMC consolidation persisting. Escalating US-Iran tensions over Gulf negotiations may further influence currency movements.